On-line radio company Pandora (P) is on fire. Previously skeptical investors are buying the story hook, line and sinker. That story of monetizing an impressive subscriber base with advertising on what was previously an entirely free service appears to be working well.
So what happened to the Apple (AAPL) threat?
Wasn’t the news of Apple entering the business supposed to be a huge game changer for Pandora? You could have fooled me based on what the stock price of Pandora is doing.
Shares have almost tripled in value since last November thanks to a series of profit reports that show the company making progress on its way to profitability.
Just like Blackberry analysts have Pandora making a small profit in the current fiscal year ending January 31, 2014. More importantly the profit growth continues in the following year to earnings of 28 cents per share.
While that may be impressive, it is also very speculative and seemingly already priced into the stock. At current prices Pandora trades for 70 times 2015 estimated earnings.
That is beyond steep. That is outrageous. One misstep and shares could fall hard just like Blackberry.
That day comes as soon as Apple gets serious about its on-line radio plans.